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Constructive Knowledge can be harmful to your position

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What you "pretend" not to know can hurt you!

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Constructive Knowledge can be harmful to your position

  1. 1. Constructive Knowledge Can Be Harmful to Your Position By Joseph P. Whalen (September 29, 2012)As I was exploring OCAHO Decisions posted on the DOJ website, I stumbledupon a sentence that got me thinking. Anyone who is familiar with that knows thatit can lead to all sorts of things. There, now that you have been warned read furtheronly at your own risk! You have been specifically warned, you now know or atleast I can make a case that you had “constructive knowledge” that this couldboggle your mind!First, I looked at the most recently released and posted decision because I had justincluded an excerpt from that in another recent essay. That most recent decisionwas, as of this writing, United States v. Santiago’s Repacking, Inc., 10 OCAHOno. 1153 (2012). Since I was already on the volume 10 webpage, I randomlyselected another that I had not already perused. That happened to be United Statesv. Associated Painters, Inc., 10 OCAHO no. 1151 (2012). I decided to furtherexplore the structure utilized by OCAHO in their written decisions (more on thatlater). In doing that when I reached the heading “IV. LEGAL STANDARD”, thevery first sentence jumped out at me, here is that sentence: “The boundaries of constructive knowledge are not fully developed in OCAHO case law. See United States v. Jonel, Inc., 8 OCAHO no. 1008, 175, 188 (1998). 1” At p. 4Two things came to mind. One was there are many things that are many“boundaries” that are “not fully developed in ... [fill in the blank (AAO, BIA,USCIS, DHS, EB-5, etc...)] ... case law”. The other was that the concept of“constructive knowledge” felt like something that needed to be explored to see if itwould help me understand EB-5 any better. I felt that way because of the recent1 This was footnote #2 in the decision I cut it from: Citations to OCAHO precedents reprinted in bound Volumes 1 through 8 reflect the volumenumber and the case number of the particular decision, followed by the specific page in thatvolume where the decision begins; the pinpoint citations which follow are thus to the pages,seriatim, of the specific entire volume. Pinpoint citations to OCAHO precedents subsequent toVolume 8, where the decision has not yet been reprinted in a bound volume, are to pages withinthe original issuances; the beginning page number of an unbound case will always be 1, and isaccordingly omitted from the citation. Published decisions may be accessed in the Westlawdatabase “FIM-OCAHO,” or in the LexisNexis database “OCAHO,” or on the website athttp://www.justice.gov/eoir/OcahoMain/ocahosibpage.htm#PubDecOrders. Page 1 of 4
  2. 2. spate of EB-5 lawsuits and related matters 2. One suit claimed that one party wasfailing to disclose unpleasant information to investors in the Offering Instrument.In another suit, disgruntled investors basically accused certain parties of stealingtheir money, which, if true could, could lead to at least SEC investigations, or evenpossibly criminal charges. While it may be too soon to speculate on that there hasbeen at least one criminal arrest relating to concealment of the source of funds foran EB-5 investment.Lastly, yet another lawsuit was just filed but against USCIS, rather than a businesspartner such as a Regional Center. I have already written separately about that but Iam curious about how one might compare and contrast the concepts of“constructive knowledge” and “collateral estoppel” or how either of them mightrelate to “reasonable reliance”. I would not be surprised if nobody else ever againgives that puzzle a passing thought. Anyway, having been directed to Jonel, I wentthere and found the following discussion to explore further. Come along for theride if you like. “Courts and commentators have used a variety of terms in discussing the theory, such as wilful ignorance, avoidance of any endeavor to know, conscious purpose to avoid learning the truth, deliberate ignorance, deliberately choosing not to learn, purposely abstaining from all inquiry, connivance, studied ignorance, wilful shutting of the eyes, omitting to inquire, knowledge in the second degree, and other comparable terms, Robin Charlow, Wilful Ignorance and Criminal Culpability, 70 Tex. L. Rev. 1351, 1352 n.1 (1992), Robbins, supra, at 191 n.3, often with no indication of whether the difference in nomenclature is intended to make a difference in the standard to be applied. These courts and commentators do not always distinguish between cases in which they find that the requisite knowledge arises from particular circumstances which would give any reasonable person sufficient reason to know something, e.g., United States v. Picciandro, 788 F.2d 39, 46 (1st Cir.), 3 cert. denied, 479 U.S. 847 (1986) (“Any reasonable person would have realized that in today’s society the bizarre bearing of shopping bags filled with large sums of cash signaled some form of illegal activity.”), and those in which an affirmative legal duty of inquiry is imposed on a certain individuals by an external source such as a statute or some other authority, e.g., United States v. Walker, 896 F.2d 295, 299 n.8 (8th Cir. 1990) (signature clause on tax return creates obligation for taxpayer to ascertain and warrant accuracy of return).2 A “related matter” that you cannot hide from is the hiring of individuals without proper workauthorization or authorized workers who are not “qualifying employees” as defined at 8 CFR §204.6(e). How about you E-Verify and join ICE’s IMAGE Program?3 “A jury convicted the defendants, Michael Picciandra and Russell Lucid, Jr., of conspiracyto defraud the United States. 18 U.S.C. Sec. 371 (1982). The jury also convicted Picciandra ofincome tax evasion. 26 U.S.C. Sec. 7201 (1982), and Lucid of aiding and abetting Picciandrain the income tax evasion, 18 U.S.C. Sec. 32 (1982). On appeal, the defendants raise a dueprocess objection based on pre-indictment delays and challenge a number of evidentiary rulingsof the district court. Additionally, Lucid challenges two jury instructions. We affirm.” Page 2 of 4
  3. 3. Moreover, notwithstanding Professor Hall’s caution against confusing a mental state with proof of its existence, Jerome Hall, General Principles of Criminal Law, 118 (2nd ed. 1960), neither do the courts and commentators consistently distinguish between the concept of wilful ignorance as being itself a guilty state of mind, and wilful ignorance as being simply evidence of facts from which actual knowledge may be inferred. Knowledge is rarely susceptible of proof by direct evidence, and as one commentator has observed, “[P]roof that a defendant appeared deliberately to avoid knowledge could be circumstantial evidence from which to infer that the defendant really did know but pretended not to know.” Charlow, supra, at 1360. See also, United States v. Gamez, 1 F. Supp.2d 176, 180 (E.D.N.Y. 1998) (“Substituting conscious avoidance of the truth as a proxy for knowledge is one way in which the law has dealt with the problem of proof ”) (citing Model Penal Code Section 2.02(7), and Jonathan L. Marcus, Note, Model Penal Code Section 2.02(7) and Willful Blindness, 102 Yale L. J. 2231, 2233-34 (1993)). Cf. United States v. Cincotta, 689 F.2d 238, 244 n.2 (1st Cir. ), 4 cert. denied, 459 U.S. 991 (1982) (“[I]f someone refuses to investigate an issue that cries out for investigation, we may presume that he already ‘knows’ the answer an investigation would reveal, whether or not he is ‘certain.’”) In the civil arena, the theory that cultivated ignorance or similar states of mind may constitute knowledge has been no less widely utilized and no less inconsistently applied, often with no clearly articulated distinction being drawn between such concepts as wilful blindness, deliberate ignorance, constructive knowledge, constructive notice, implied notice, implied knowledge, imputed knowledge and the like.” At pp. 9-10That might appear rather “heady” as in, complicated, complex, and convoluted,and that seems about right because, it is. Now that you head hurts, I will try tomake it hurt a little more. Ponder these if you dare:Will the evidence show that you had “constructive knowledge” that: • Your investment partner was using illegal proceeds from a criminal enterprise in your EB-5 venture; or • Your partner’s funds passed through an OFAC prohibited Bank; • Your business partner obtained funds from someone listed on the OFAC 5 Specially Designated Nationals (SDN) and Blocked Persons List; or • Something even worse?4 This criminal appeal challenges the trial courts disposition of five issues, pertaining to thesufficiency of the evidence against one individual defendant, the sufficiency of the evidence andindictment against the corporate defendant, and, involving both individual defendants, theadequacy of remedies for prosecutorial misconduct, the admissibility of a hearsay document, andthe propriety of a jury instruction on the implications of a defendants conscious avoidance ofknowledge.5 September 28, 2012, (524 page) List at: http://www.treasury.gov/ofac/downloads/t11sdn.pdf Page 3 of 4
  4. 4. You might recall that I mentioned at the beginning that I was looking over the OCAHODecisions because I wanted to further explore the structure utilized by OCAHO in theirwritten decisions. I thought that perhaps Regional Center Approval Notices and maybestand-alone non-Regional Center I-526 Approval Notices might be improved in bothformat and functionality.OCAHO Decisions are somewhat formulaic. This can be either very good or lead tomediocrity. I think that realizing the danger of mediocrity in advance can help prevent itso, I am willing to suggest that formulaic is actually a good thing in certain contexts.USCIS and EOIR already use massive numbers of “templates” as things now stand. TheEB-5 Regional Center Approval Notices have been somewhat formulaic for years butwith a twist due to: • the potential variety of “kinds or commercial enterprises” and • differently structured “reasonable methodologies” as well as • vastly different characteristics and sizes of “geographic areas”that may be encompassed and which comprise the “scope of the Regional Center”.OCAHO Decisions tend to be formatted similarly but they too have evolved over time.The first list of headings is from Jonel in 1998 and the second is from Santiago issuedAugust 24, 2012. 1998 2012 • PROCEDURAL HISTORY I. PROCEDURAL HISTORY • STATUTORY AND REGULATORY II. BACKGROUND INFORMATION BACKGROUND III. LIABILITY FOR THE VIOLATIONS • SUMMARY OF THE EVIDENCE ALLEGED • QUESTION PRESENTED A. The Government’s Motion • STANDARD TO BE APPLIED B. Santiago’s Repacking’s Response • DISCUSSION C. Discussion and Analysis IV. PENALTIES • CIVIL MONEY PENALTIES A. The Government’s Motion • FINDINGS OF FACT, B. Santiago’s Repacking’s Response CONCLUSIONS OF LAW, AND C. Discussion and Analysis ORDER V. FINDINGS OF FACT AND • ORDER CONCLUSIONS OF LAW • APPEAL INFO [Standard blurb w/o A. Findings of Fact heading.] B. Conclusions of LawSeveral sub-headings omitted. ORDER Appeal Information [Actual Heading]Variations exist and will likely always exist but striving towards a workable standard is aworthwhile endeavor. Regional Center Designation Notices would be more helpful iftweaked a bit. I am very partial to OCAHO’s “Findings” and “Conclusions” sections andfeel that the RC “scope” and “process moving forward” information could be improved.That’s my two-cents, for now. Page 4 of 4

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